Why Are OKRs in Vogue?

Posted by Robert Norton on

I would not say they are “In vogue” at all. They have always been a fundamental building block of good management. Recently the term OKRs has become more common because it has been used and promoted by some VCs, Google, Intel and other successful companies. However, OKR is almost identical to Management By Objective (MBO) that was created in the 1960s by Peter Drucker, The Father of Management.

This is a classic management principle that any professional manager should understand which most business schools fail to teach well. It is the “Blocking and tackling” of management that cannot be ignored. Sometimes it is called SMART Goals, a slightly different take with 90% overlap too, that is an acronym for Specific, Measurable (metrics), Attainable, Realistic and Time bounded. All-important attributes to set non-ambiguous goals.

Decades of research has shown a 56% improvement in value creation at companies that use good goal setting systems, specifically MBO. Many companies think they do this, but fail to adhere to its key requirements and drift away from the discipline needed.  MBO/OKR solves many problems in team alignment, focus, communication and far more.  Companies without them are very unlikely to succeed and will be bested in competitors

that do it well.  

Metrics, or KPIs (Key Performance Indicators) also were promoted by Peter Drucker, The Father of Management who said: "You cannot improve what you do not measure." Which is literally true.  You must benchmark performance to even know it has improved.   

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While no one knows the exact origins of the term KPIs, it is believed that the emperors of the Chinese Wei Dynasty (3rd century) rated the performance of members of their family in the first known instance of rudimentary KPI usage. 
 
KPIS allow you to track trends and hard results as departments, processes and people mature allowing for optimization, advanced warning  and a way to focus attention where it can get best impact.
 
I always separate MBOs from KPIs, as one is numbers and the other is a text description that requires discussion for alignment and understanding by any team.  We know this increases success, understanding and disciple in monthly review processes and creates a strong management cadence.  It causes constant improvement and communications and avoid surprises. 
 
Accountability, team spirit and culture will also improve, as people feel they are in better control of their own areas and objectives.  See my free videos on Dashboard/KPIs here: Dashboards And Metrics. The full courses are available at low cost for your entire team here.    And we will even coach you through it and guarantee results with our full service do it with you package.
 
Every department with more than five people should have monthly MBO meetings, and separately a dashboard with metrics, or Key Performance Indicators (KPIs).  These are the inputs and outputs to key processes and departments that measure results and can be used to see trends. They show hard empirical results, allow good goal setting and reduce confusion.  Too many benefits to list here really.  Doing these two things well is the biggest difference between professional management and the keystone cops. 

You can see some of my videos on Management By Objective/OKRs here: Management 101 The Basics of Goal Setting, Accountability and Team Performance MBO p1

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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.

Call (619) SCALE06 or email info@AirTightMgt.com for a complementary strategic consultation.


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